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Another Net consultant prunes revenue outlook

Profits aren't coming naturally for Organic, which has recently seen its stock plummet as investors lose interest and competition heats up in a niche that appears ripe for massive consolidation.

2 min read
Profits aren't coming naturally for Organic.

The San Francisco-based company is the latest Net consultant to say it will not meet analysts' expectations this quarter.

Organic expects third-quarter revenue to grow about 5 percent from the $37.2 million the company posted for the second quarter of 2000 but still to be less than earlier anticipated. As a result, Organic does not expect to reach its goal of profitability during the third quarter, the company said in a statement released late yesterday.

Analysts polled by First Call/Thomson Financial expected the company to post a profit of 2 cents a share.

Organic, which provides clients with Web development, strategy, design and systems integration work, has become the latest Net consulting company to warn of disappointing quarterly results.

Like its rivals iXL Enterprises, Scient, Viant and a slew of others, Organic has recently seen its stock plummet because of investors' lack of interest and as competition heats up in a niche that appears ripe for massive consolidation.

Organic's stock has been dangling in the $5-per-share range, far from its 52-week high of $60 per share. The company has hit a low of $4.75 for the year.

Several analysts have recently trimmed their profit forecasts or downgraded stock ratings for many players in the group in response to an overall shift in consulting projects. Given that most Net consultants are continuing to turn their focus away from dot-com projects to longer-term and more lucrative Fortune 500 engagements, analysts have said companies will see slower revenue growth, since projects will take longer to complete.

Organic, which serves several large clients including DaimlerChrysler, British Telecommunications and Federated Department Stores, said it is continuing to focus on narrowing its operating losses. The 7-year-old company, which said it is "optimistic" about the future, expects to turn a profit by the second quarter of 2001.

The company is slated to report third-quarter results Oct. 23.

Atlanta-based iXL, which last week warned of weaker third-quarter revenues, recently said it will cut about 350 jobs and take an unspecified charge for the quarter.